Legal perspectives In this feature estate agency regulator powers of delegation decision-making Services for rent? A pre-emptive judicial review in July explored whether UK regulator for estate agency matters, Powys County Council, has the authority to delegate the role of investigator. Ruth Bala considers the issues T he National Trading Standards Estate Agency Team of Powys County Council is now the UKs regulator under the Estate Agents Act 1979. The procedures governing the regulation of estate agents have recently been considered by Mr Justice Holman in Littlewood v Powys County Council [2015] EWHC 2125 (Admin), which were handed down on 23 July 2015. Specically, the High Court was reviewing the authoritys procedures when determining whether to issue an estate agent with a prohibition order*. However, the judgment also has more general signicance when looking at regulatory decisionmaking by local authorities. Although there is a high risk of consumer harm in the eld of estate agency, there are no requisite qualications to be an estate agent and no licensing regime. This makes regulation by local authorities of prime importance. The chief instrument of regulation is the power to issue a prohibition order under section 3 of the Estate Agents Act 1979 (EAA), with the secondary power to issue a section 4 warning order** in less severe cases. A prohibition order may either be in blanket form, forbidding the person affected from undertaking any estate agency References: The contents of this column do not necessarily reect the views of CTSI, nor do they always take account of the law in Scotland *A prohibition order can ban someone from all, or some aspect of, estate agency work. Failure to comply with a prohibition order is a criminal offence, which means you could be ned. The estate agency guide, Ofce of Fair Trading. **A warning order is issued where an estate agent has committed certain breaches and any further breaches will be taken as evidence that he/she is unt to be an estate agent; it is often a prelude to a prohibition order. TAP TO NAVIGATE PAGES 1 2 3 4 5 Credits Published You might also like Ruth Bala is a barrister at Gough Square Tuesday 27 October, 2015 Satisfaction guaranteed? October 2015 Chambers. Images: Dzm1try / Shutterstock To share this page, click on in the toolbar work or, more specically, by banning a particular sort of work. The gravity of a prohibition order for the person affected potentially leading to loss of livelihood and the commission of a criminal offence in cases of non-compliance is such that it cannot be made by any local authority, but only by the lead enforcement authority. Since 1 April 2014, Powys County Council has been designated the lead enforcement authority for the purposes of the EAA, pursuant to section 33(1). Prior to that, these duties and powers had been discharged by the director general of fair trading, and subsequently the Ofce of Fair Trading (OFT), for more than 30 years. Powys had successfully bid in public competition to be the lead enforcement authority. It had tendered on the basis that the OFT had taken on average 10 prohibition or warning order cases per year. However, the High Court noted that Powys was now facing some resource concerns; in just over a year it had already made 11 adjudications making prohibition or other orders, and it had some 41 investigations under way. The procedural requirements prior to issuing an order are contained in Schedule 2 to the EAA. When Powys proposes to make a prohibition or other order, it must give the person affected notice of its proposal. The notice must invite the recipient to submit written representations within 21 days, or give notice of their wish to make oral representations. Where the recipient indicates a wish to do the latter, Powys must arrange for the oral representations to be heard. The High Court claried that there was nothing wrong in the lead enforcement authority delegating the exercise of its statutory power to make a prohibition order to an individual (the adjudicator). Naturally, decision-making could be by an individual on behalf of an authority. The issue in Littlewood was whether Powys could legitimately arrange for the oral representations to be made face-toface before an investigator, and then forward an audio tape and transcript of the hearing to its adjudicator. The case was a pre-emptive judicial review, to avert any future irregularity if Powys adhered to this procedure. This dichotomous process, with a split between the roles of the investigator (at the fact-nding stage) and the adjudicator (at the decision-making stage) has no statutory basis in the EAA. Instead, it was copied from the approach followed by the OFT prior to transfer of regulation. The critical difference was that the OFT had arranged for any oral hearing to be face-to-face before the adjudicator. This sort of approach had been typical of the OFT applied by it, for instance, in consumer credit licensing and minded to revoke (MTR) proceedings. The OFT had been painfully aware of the importance of maintaining separation between the investigator and the adjudicator. For instance, in the Colorvision plc proceedings, the parliamentary ombudsman found a breach in the OFTs Chinese walls, which resulted in its investigative team having access to the adjudicator and affecting his decision; the OFT paid the rms founders 4.73m in compensation. Powys argued that, in wishing to hold oral hearings directly before the investigator, it was not motivated by resource concerns, but wished to entrench this separation, and protect the independence of the adjudicator. The High Court rejected this argument, but held in any event that it was a question of statutory construction. Although Schedule 2 did not say very much about the decision-making procedure, it did not permit any oral hearing to be before a person other than the ultimate decision-maker. Otherwise, the advantage of conferring the right to an oral hearing would be illusory. The advantage of an oral hearing above the right to enter written submissions was that it gave an opportunity to persuade the decision-maker face-to-face. The interesting aspect of the decision lies not so much in the statutory construction of Schedule 2, but in the consideration of the differences between judicial and regulatory decision-making. As a non-judicial body, what additional latitude did the local authority have when it came to implementing decision-making procedures? Traditionally, the starting point has been that local authorities have the right to devise their own procedures. This is because they are administrative bodies, and regulatory decision-making belongs to a different sphere from the court system. In Local Government Board v Arlidge [1915] 1 AC 120, Viscount Haldane LC sharply distinguished between administration and the exercise of judicial functions, and stated (see page 132) that when a body such as the Local Government Board has the duty of enforcing obligations of the individual that are imposed in the interests of the community: Parliament must be taken in the absence of any declaration to the contrary to have intended it to follow the procedure which is its own, and is necessary, if it is to be capable of doing its work efciently. In the Court of Appeal below ([1914] KB 160), Vaughan Williams LJ (at page 180) referred to there being no right in the administrative context to see the judge [viz the decision maker] face to face or to address him viva voce. The latter passage was distinguished in Littlewood as, in the EAA, parliament had expressly granted the right, upon request, to have an oral hearing. Further (at [28] and [32]), Powys adjudicator was required to act in a judicial manner. Firstly, he had to make a factual assessment of whether one of the trigger matters in section 3(1) applied; for example, whether the estate agent had committed an offence which, following amendment to the EAA, could be in the absence of a conviction, or was guilty of discrimination. Secondly, the adjudicator had to be satised of untness to be an estate agent, which involved an exercise of judgment. Thirdly, the making of a prohibition order was discretionary, which again involved making a judgment, and nally there was an overall discretion as to whether to make the order blanket or specic. Accordingly, (at [28]): Although the function is administrative and regulatory, the effective decision maker, viz the adjudicator, is clearly required to act in a judicial manner and certain qualities of a judicial kind are required of him. This was so, despite the additional procedural safeguard of a right of appeal from Powys decision to a fully judicial tribunal the First Tier Tribunal. It is not suggested that the decision in Littlewood is wrong, but it does represent another weakening of the membrane between regulatory and judicial decision-making. Where regulatory decision-making has potentially grave consequences for the individual affected, such as loss of livelihood, then procedural fairness understandably becomes important. Yet procedural fairness is always a matter of degree here, the EAA provided for the right to an oral hearing, with informal witness evidence. Any incremental increase in procedural fairness, such as the right to cross-examine witnesses, moves progressively closer towards quasi-judicial decision-making.